Percentage points vs percent: what is the difference?
An interest rate rising from 4% to 5% is up one percentage point but 25 percent. Why the two are different, when to use each, and how headlines mislead with them.
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Tool for this job: Percentage Calculator
“The interest rate rose by 1%.” “The interest rate rose by 25%.” If the rate went from 4% to 5%, both sentences describe the same change, and only one of them is clear. The difference between percent and percentage points matters whenever the thing you are measuring is itself a percentage.
The two measures
- Percentage points are the simple difference between two percentages: 5% − 4% = 1 percentage point.
- Percent change is how much the value changed relative to where it started: a rise of 1 on a base of 4 is 1 ÷ 4 = 25%.
Both are correct; they answer different questions. Percentage points tell you the gap. Percent change tells you the scale of the change compared with the starting level.
Examples
| Change | Points | Percent |
|---|---|---|
| Interest rate 4% → 5% | +1 | +25% |
| Vote share 40% → 44% | +4 | +10% |
| Unemployment 6% → 5% | −1 | −16.7% |
| Pass rate 80% → 88% | +8 | +10% |
| Risk 1% → 2% | +1 | +100% |
How headlines use them
The last row shows why this matters. “Doubles the risk” and “raises the risk by one percentage point” describe the same finding. The first sounds alarming; the second tells you that 98 people in 100 are unaffected either way. Health stories often quote the relative change (percent) because it is bigger, and leave out the absolute change (points). When you see a dramatic percentage, look for the starting level.
The reverse happens too. A party whose vote share moves from 4% to 6% has grown by 50%, a big story for a small party, even though it gained only two points.
A percent of a percentage
Sentences like “rates fell by 10%” are ambiguous when the rate was 5%. Read as percent, the rate fell to 4.5% (10% of 5 is 0.5). Read carelessly as points, it fell to −5%, which is impossible. The same goes for “tax up 2%”: from 20% that is either 22% or 20.4%. If you are writing, avoid the ambiguity by giving the before and after figures.
Which one to use
- Use percentage points when comparing two rates directly: interest rates, tax rates, exam pass rates, market shares, poll results.
- Use percent when the starting level matters to the reader: “your mortgage rate rose by a quarter” is meaningful for someone working out a budget.
- Give both when there is any chance of confusion: “up 1 percentage point, from 4% to 5%”.
Basis points
In finance, small changes in rates are often given in basis points. One basis point is one hundredth of a percentage point, so 25 basis points is 0.25 percentage points. A central bank that “raises rates by 25 basis points” takes a rate from, say, 4.00% to 4.25%.
Work it out
For percentage points, just subtract. For percent change, use the % change mode of the Percentage Calculator: enter the old rate and the new rate as plain numbers, such as 4 and 5, and it gives 25%. It also shows the absolute difference, which is the change in points.
For the general method behind percent change, see how to calculate percentage change.